Nuveen spurring bank sales of its Munipreferred funds.

Angling to attract a wider audience for its preferred municipal bond account, John Nuveen & Co. is promoting the investments as an attractive alternative to certificates of deposit.

By positioning the Munipreferred funds as a relatively safe, liquid, tax-advantaged alternative, the Chicago-based mutual fund company has boosted sales through banks.

While the bulk of its Munipreferred sales have historically been through wire houses, sales through banks are booming. In the past seven months, sales of Munipreferred in banks have grown 37%, according to the company.

Munipreferred is the preferred stock issued by several of Nuveen's tax-free funds that invest in a diversified portfolio of municipal bonds to provide short-term income.

At $25,000 a share, the product is geared toward the type of customers that use private bankers, he said.

About a quarter of the affluent marketplace have a municipal bond fund, according to PSI, a Tampa-based research firm.

Nuveen Munipreferred's yield, which was 2.7% to 2.8% on Monday, is attractive compared with other short-term investments and is rated AAA by both Moody's and Standard & Poor's, the major securities rating agencies.

Shares can be tendered at weekly auctions, providing greater liquidity than CDs.

Tax-Free Income

In addition to the three principal selling points - yield, safety, and liquidity - income is also tax-free, a particularly appealing feature since the Clinton tax plan was passed.

One drawback in the bank channel is that Munipreferred can only be sold by brokers with a Series 7 license, the National Association of Securities Dealers' license that enables sales representatives to sell such securities.

Many sales representatives based in banks only hold the Series 6 license, restricting them to selling mutual funds.

Licensing Requirements

However, Mr. Jones said that licensing requirements have not hindered bank sales.

In addition to its national funds, Nuveen now has Munipreferred products for 17 states, including many high-tax states.

The market for preferred municipal products is about $17 billion overall, of which Nuveen has about $7 billion worth.